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Thursday, June 28, 2012

Miami-Area Patient Recruiters Sentenced to Prison for Roles in $200 Million Medicare Fraud Scheme

Two Miami-area patient recruiters were sentenced to 84 months and 63 months in prison, respectively, for recruiting Medicare beneficiaries as part of a $200 million Medicare fraud scheme, the Department of Justice, the FBI and the Department of Health and Human Services announced today.

James Edwards was sentenced today to 84 months in prison and three years of supervised release and Nelson Fernandez was sentenced yesterday to 63 months in prison and three years of supervised release.  In addition, Fernandez was sentenced to pay $13.1 million in restitution, joint and several with co-conspirators, and Edwards was sentenced to pay $4.1 million in restitution, joint and several with co-conspirators.  Edwards and Fernandez were both sentenced by U.S. District Judge Patricia A. Seitz. 
Fernandez, 43, pleaded guilty to the scheme on Aug. 2, 2011, and Edwards, 65, pleaded guilty on July 13, 2011.  Both admitted to serving as patient brokers for American Therapeutic Corporation (ATC).  ATC, its management company, Medlink Professional Management Group Inc., and a related company, the American Sleep Institute (ASI), were Florida corporations headquartered in Miami.  ATC operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando.  A PHP is a form of intensive treatment for severe mental illness.  ASI purported to provide diagnostic sleep disorder testing.

According to court documents, Fernandez and Edwards recruited patients to attend ATC’s PHP program in exchange for per patient, per day kickbacks.  Based on their recruiting, Fernandez admitted to causing $8 million in fraudulent submissions to Medicare and Edwards admitted to causing $8.16 in fraudulent bills to Medicare.  Both Fernandez and Edwards admitted that they knew the patients they recruited for ATC were not qualified to receive PHP treatment.  Both men also admitted to recruiting ineligible patients for ASI’s sleep studies.  Fernandez additionally admitted to causing $14.7 million in fraudulent bills to Medicare in a separate home health services scheme in which he used some of the same patients that he brokered to ATC.  Edwards additionally admitted to causing $4.1 million in fraudulent bills to Medicare in a separate PHP scheme.
According to court filings, ATC’s owners and operators paid millions of dollars in kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI.  In some cases, the patients received a portion of those kickbacks.  According to court filings, to obtain the cash required to support the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare.  According to court filings and evidence admitted at trials of co-defendants, ATC and ASI also did not provide the treatment billed to Medicare and co-conspirators fabricated documents in patient files to hide the ineligible patients and inappropriate treatment.
ATC, Medlink, and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011.  ATC, Medlink and 19 of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial on Oct. 22, 2012, before Judge Seitz.  A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Xanthi C. Mangum, Acting Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino, Robert Zink, and James Hayes of the Criminal Division’s Fraud Section.  A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division.  The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

Press Release Number: 
Updated September 15, 2014